Israel: Gov't Seeks Chinese Aid to Build Eilat Railway

Collaboration with China is the Israeli government's preferred solution for building the high-speed railway to Eilat. Last night, Minister of Transport Israel Katz sent to Prime Minister Benjamin Netanyahu the proposal, which will probably be submitted to the cabinet for approval on Sunday. The proposal includes special legislation to expedite the project's complex planning procedures in the same way that was done for Road 6 (the Yitzhak Rabin Highway toll road).

The proposal calls for a team headed by Prime Minister's Office director general Harel Locker to recommend, within 90 days, the best alternative for building the railway. The three options are the Chinese option, a private franchisee, or the state budget.

The Ministry of Finance will probably object to financing the project from the budget. The project's preliminary cost estimate is NIS 7 billion, just for laying the rail, and could go as high as NIS 30 billion, including rolling stock, double tracking the line, electrification, and peripheral equipment.

The option of a private franchisee under a BOT (build, operate, transfer) project, as was done for Road 6, would probably be found to be economically unfeasible.

The Chinese option is based on a government-to-government agreement, with construction going to a Chinese government company. The Ministry of Transport believes that such an agreement will render the need for a tender unnecessary.

Netanyahu has called to shorten travel time on the future railway between Tel Aviv and Eilat to two hours from two and a half hours, and said that the railway was of great strategic importance to the country.

Katz recently visited China as a guest of China's Minister of Transport, and was impressed by the ministry's contracting arm China Communications Construction Company Ltd. Sources inform ''Globes'' that Israel's Ministry of Transport has already prepared a memorandum of understanding (MOU) for its Chinese counterpart, if the cabinet approves the Chinese option.

A Ministry of Transport team has toured the planned route of the Eilat railway. It is assumed that without special legislation, the planning and licensing procedures for the line could take years. The 240-kilometer line from Dimona will include a long tunnel from the Negev plateau to the Arava Valley. To meet Netanyahu's travel time, the train will have to travel 230 km/h along the Arava.

Shaul Bitterman, who represents Chinese government companies in Israel, told "Globes" that a delegation from China's Ministry of Transport is due to visit Israel in February to study the project's details.

Published by Globes [online], Israel business news - www.globes-online.com - on January 25, 2012